New Chinese export restrictions on rare earths underscore the need for a more flexible EU policy
On August 15, 2024, China’s Ministry of Commerce announced that export controls on antimony would take effect on September 15. This is the latest in a series of export restrictions by China, which dominates global mining and processing of rare earth elements.
Antimony is used in the production of flame retardants, lead-acid batteries, and as an alloy to strengthen other metals. It also has a range of military applications, including night vision devices, armor-piercing ammunition, and nuclear weapons production. China accounted for 48% of global antimony production in 2023.
Prices for antimony had already reached an all-time high of over USD 22,000 per tonne at the end of July 2024, having roughly doubled since the start of the year due to global shortages.
Concerns about tungsten supply
The recent announcement by China’s Ministry of Commerce regarding antimony has also sent shockwaves through the global tungsten supply chain. Tungsten is indispensable for a range of military applications, is extremely hard, and has the highest melting point of all metals. China currently dominates the export market for tungsten, producing about 80% of global supply. Some experts predict that China may introduce export controls on tungsten by the end of the year, if not sooner.
Both antimony and tungsten are included in the EU’s list of critical raw materials, with tungsten classified as a strategic raw material.
Background: China’s export restrictions in 2023
Just over a year earlier, on August 1, 2023, China announced export restrictions on the rare earth elements gallium (Ga) and germanium (Ge), and on high-grade graphite (C), citing “national security” reasons.
Germanium and gallium are used in solar products, fiber optics, and high-frequency chips for mobile phones and satellites. It should be recalled that Beijing imposed these export controls after the United States decided in 2023 to restrict China’s access to advanced semiconductors.
U.S. recognizes dependence on rare earths as a “national emergency”
As reported in a previous edition of this newsletter, former CIA Director and Secretary of State under President Donald Trump, Mike Pompeo, traveled to Barcelona in June 2023 to open the annual meeting of the Rare Earth Industry Association (REIA). Pompeo serves as a special adviser to USA Rare Earth (USARE). In September 2020, President Trump declared a national emergency over the “unacceptable dependence of the United States on critical minerals from foreign adversaries” — a thinly veiled reference to China. His successor, President Joe Biden, has continued this policy. There is concern that China could reduce or halt exports of critical rare earths if tensions over Taiwan or the South China Sea escalate into open conflict.
EU response: CRMA aims to reduce foreign dependence
The EU has also recognized the dangers of foreign dependence. “Lithium and rare earths will soon be more important than oil and gas,” emphasized European Commission President Ursula von der Leyen in her 2022 State of the Union address. “By 2030, our demand for these rare earth metals will increase fivefold,” she said. “As a result, we are witnessing a global race for the supply and recycling of critical raw materials.”
Strong words were followed by action. After more than a decade of study and consensus-building, the EU adopted the Critical Raw Materials Act (CRMA), which entered into force in May 2024.
The CRMA stipulates that by 2030, 10% of the EU’s annual consumption must be mined domestically, 40% processed domestically, and 25% of processing waste and end-of-life materials recycled domestically. The law also states that the EU must not source more than 65% of any strategic raw material from a single country.
Excitement over major rare earth discovery in Norway
The long-term CRMA strategy rests on four pillars, the first of which is mining. There has been a lot of media excitement about this recently. In June 2024, Rare Earths Norway announced the discovery of the largest known rare earth deposit in Europe. The deposit, known as the Fen Carbonatite Complex, is located at the southern tip of Norway on the site of an extinct volcano.
Contains key materials for electric vehicles and wind turbines
According to the 2012 Joint Ore Reserves Committee (JORC) Code, the Fen deposit is estimated to contain 559 metric tonnes with 1.57% total rare earth oxides (TREO) — equivalent to 8.8 metric tonnes of TREO with “reasonable prospects for economic extraction.” It also includes an estimated 1.5 tonnes of magnetic rare earths, which are used in electric vehicles and wind turbines.
There is also further upside potential. Current estimates for the rare earths are based on drilling down to 468 meters below mean sea level, while Norwegian geological sources suggest the deposits may extend to 1,000 meters below sea level.
While the scale of the discovery is significant, the key question remains how soon industrial-scale mining can begin and how long it will take before the deposit makes a meaningful contribution to Europe’s demand for rare earths and metals.
According to a Reuters report, non-EU member Norway could supply only about 10% of the EU’s rare earth demand by 2031.
Implementation challenges for other aspects of the CRMA
Besides mining, the CRMA has three other strategic pillars: processing, recycling, and supply diversification. There are challenges in implementing all of them.
Processing
The CRMA primarily targets rare earths such as neodymium, praseodymium, dysprosium, and terbium, which are used to produce magnets for electric batteries and wind turbines. However, there is a major loophole — imports of finished magnets made in China are not covered.
The company Neo Performance Materials is building a permanent magnet factory in Estonia that, within two to three years, is expected to produce 2,000 tonnes per year — enough magnets for about 1.5 million electric vehicles. Neo estimates its magnets would cost USD 20–50 more per vehicle than imported Chinese magnets. It remains unclear whether manufacturers are willing to bear these additional costs.
Recycling
According to Adamas Intelligence, in 2023 nearly 21,000 tonnes of permanent magnets were discarded in Europe — found in mobile phones, hard drives, electric vehicle traction motors, wind turbines, MRI machines, and hundreds of other applications. Currently, less than 1% of this amount is recycled annually. There is therefore still a long way to go before recycling meaningfully reduces foreign dependence on rare earths.
Supply diversification
The key question is how quickly alternative sources can be developed. Diversification requires careful consideration. For example, the Democratic Republic of the Congo, which exports 70% of the world’s cobalt supply, is politically unstable and poses a supply risk. Moreover, China owns 70% of the mines in the DRC.
Does the CRMA need a more agile fifth pillar?
As described above, there are significant obstacles to implementing the CRMA’s four main pillars. Another problem is timing — 2030 is still more than five years away. China’s recent decision to halt exports of the rare metal antimony within a matter of weeks — and predictions of further restrictions ahead — highlight the need for Europe to adapt much more rapidly to developments outside the EU.
Current prices for antimony www.ise-metal-quotes.com
For this purpose, it may be time to consider a fifth pillar of the CRMA. This would include two key elements:
First, an advisory body for EU policymakers, composed of experts from industry, research institutions, and government. This body would monitor both rapid developments and longer-term trends and issue concrete recommendations.
Second, the creation and maintenance of a strategic EU reserve of rare earths. This could involve targeted market interventions for critical raw materials, partly based on the advisory board’s recommendations.
It is clear that establishing and financing such a pillar to complement the existing CRMA strategy would require substantial effort. The author hopes that this article can stimulate further discussion and progress on this important issue.
Conclusion: Time for greater awareness of urgency
The EU’s Critical Raw Materials Act represents an important step forward in protecting Europe from dangerous dependence on other nations for essential raw materials. However, as outlined above, there are challenges in implementing the CRMA. The 2030 timeline is also called into question by the increasing speed and scope of China’s export restrictions.
In short: Are we adapting quickly enough to the changing external environment to secure Europe’s technological and industrial future?
ISE AG – August 2024
Chinesische Rohstoffe, einfuhr beschränkungen, Allzeithoch Antimonpreise, Antimon-Exportkontrollen, Blei-Säure-Batterien, China und Seltene Erden, CRMA (Critical Raw Materials Act), Diversifizierung des Rohstoffangebots, EU-Abhängigkeit von Rohstoffen, EU-Liste kritischer Rohstoffe, Flammschutzmittel, Geopolitische Spannungen, Marktinterventionen in der EU, militärische Anwendungen, Recycling von Dauermagneten, Seltene Erden, Seltene Erden in Norwegen, US-Notstand kritische Mineralien, Verarbeitungsindustrie, ISE AG, Institut für seltene Erden und Metalle AG, Wolfram Lieferkette
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